Outsourced CFO Services: What That Means and How It Can Help You

Outsourcing is now a proven model allowing businesses to focus on their core activities thus improving opportunities for growth, increasing efficiency and effectiveness, and improving the bottom line.

Within the past few years, there has been a significant increase in outsourced accounting functions including bookkeeping, controller functions, and CFO-level services. In this first LM CFO blog, we’ll break down the meaning of CFO-level services and how outsourcing these services can significantly benefit an organization in more ways than you might first imagine.

In addition to being responsible for the company’s overall financial external reporting, a typical CFO oversees the company’s internal reporting processes, as well as managing financial planning and cash flow. Not incidentally, CFOs also manage business risk and help ensure that a company is profitable to the owners and shareholders of the organization. These activities play a major role when a strategic opportunity such as a merger or acquisition is on the table. On a more granular basis, CFOs are also responsible for ensuring that the accounting staff is well trained, and following protocol and accounting processes. In sum, the CFO’s role is both functional and strategic.

CEOs and the owners of small to mid-size businesses often do not employ a full-time CFO largely due to the very real financial impact, or because they believe they don’t need the extra level of support. Rather, they employ a controller augmented with accounting staff. When faced with this reality, what exactly does Outsourced CFO services mean? At the most general level this can mean sending out work to an outside provider in order to cut costs. However, when the topic is CFO and accounting services there is more to it than meets the eye. Outsourcing a firm’s accounting services does indeed have a cost savings component but there can be much more to gain in terms of financial and strategic benefits. A well thought out CFO-level outsourcing plan allows executives and business owners to better focus their time and energy on their people and to better manage the resources of their company toward its core objectives. As the The Wall Street Journal published in a recent article on the benefits of Outsourcing CFOs:  “Outsourced CFOs have a bigger role than accountants, who mainly keep track of the company’s books. They work with business owners to manage their finance departments, connect them with business sources that can help them grow and provide financial data to help make strategic long-term or day-to-day decisions.” It is precisely this strategic advisory angle where perhaps the most important benefits from outsourcing are derived.

CEOs and business owners want to structure their business strategically but may fail to realize they can receive this support for a fraction of the price of full time senior financial staff. Business owners make critical decision daily, and having a financial expert along the way helps inform executive decision-making by allowing opportunities and threats to be seen more coherently and comprehensively, and within a larger more strategic framework. Without question, sound financial administration is a bedrock principle, but the added value of a CFO with advisory skills markedly expands the impact of the role within a firm while at the same time freeing up precious time and resources

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